14 February 2013
Sound Oil plc
("Sound Oil" or "the Company")
Signature of Nervesa Rig Contract
Sound Oil, the Italian focused upstream oil and gas company is pleased to announce the signature of a rig contract with LP Drilling SrL ("LP Drilling") for the forthcoming Nervesa appraisal well in Northern Italy.
The Company has recently been advised by the Veneto regional authority that the written "Autorizzazione" for the Nervesa appraisal drilling is expected to be delivered to the Company on the 1st March. The Company has therefore now concluded a contract to lease the TB 2100S hydraulic drilling rig for the appraisal well addressing the Nervesa gas discovery on the Carita Permit. The contract allows the Company to mobilize the rig on 25th March which the Company will do assuming the written permissions have been received by that point. All other terms are broadly consistent with the previously announced Letter of Intent signed last October. The Company estimates that the remaining spend for the appraisal well is approximately €2.9 million including rig costs, of which Sound Oil will fund €1.4 million (the balance being paid directly by the funding contract with CSTI).
James Parsons, Sound Oil's Chief Executive Officer, commented:
"Nervesa is a 21Bscf gas discovery which was discovered by ENI in 1985 and was put into production for several years. The discovery has an independent assessed base case value of circa US$60 million.
Operations to prepare the site for this flagship project are now complete.
We are pleased to have received confirmation from the Italian permitting authorities that there are no outstanding issues and that the "Autorizzazione" will be awarded immediately after the Italian elections. Assuming the Autorizzazione is received as expected on 1st March, we expect the well to spud on the 1st April. Whilst this is later than originally expected it does enable the rig to be mobilized in the first quarter and spud to occur shortly thereafter.
The signature of the rig contract is the final step to ensure the Company is ready for the drilling of this key well. "
For further information please contact:
James Parsons, Chief Executive Officer
Smith & Williamson - Nominated Adviser
Tel: 44 (0)20 7131 4000
Westhouse Securities - Broker
Tel: 44 (0)20 7601 6100
Buchanan - Financial PR
Tel: 44 (0)20 7466 5000
The estimated gas resource volume and value mentioned above are based on P50 contingent resources and NPV10 estimates included in a Competent Person's Report prepared by Fugro Robertson Limited in October 2011. "P50" refers to a 50% chance of finding a given volume and is consistent with SPE (The Society of Petroleum Engineers) guideline; NPV10 refers to net present value at a discount rate of 10%; Bscf means billions of standard cubic feet. The information contained in this announcement has been reviewed by Sound Oil's Chief Operating Officer, Dr M. J. Cope BSc PhD CGeol FGS, a qualified petroleum geologist.